[July 09, 2014]LISBON (Reuters) -
Portugal's Espirito Santo banking family is set to
propose to creditors an extension of the maturities of
the debts issued by its Luxembourg-registered holding
company, business daily Diario Economico reported on
Wednesday.

Espirito Santo International (ESI) has been under scrutiny since an
audit found "material irregularities" at the holding company of the
family which founded Portugal's largest listed bank by assets, Banco
Espirito Santo (BES).

Diario Economico reported the company was likely to present the plan
to authorities in Luxembourg before proposing it to creditors. The
holding company has 7 billion euros ($9.6 billion) in debt, the
paper said.

Luxembourg authorities said last month they had launched an
investigation into ESI over alleged breaches of company law.

Separately, weekly Expresso reported that clients holding the debts
of Espirito Santo family companies had received proposals to swap
the debt for equity. The paper said 85 percent of commercial paper
would be converted into equity and 15 percent would become long-term
debt.

The weekly cited a source close to one of the family holding
companies as saying such a debt-for-equity swap was one of the
proposals on the table for the family.

Nobody at the family companies was immediately available to comment
on the stories.

ESI's debt has been the source of growing concerns around Banco
Espirito Santo because the bank sold the commercial paper to its own
retail clients. Still, BES has said there is a provision of 700
million euros to pay back retail clients.

The Espirito Santo family has given no explanation for the growing
debts at its holding companies.

Last week Espirito Santo Financial Group (ESFG), the company that
holds the family's 25 percent stake in BES, said the family's
companies owed it 2.35 billion euros in June, up from 1.37 billion
euros at the end of last year.